Paul-Martin Foss

Friday January 26, 2018

A year after President Donald Trump’s inauguration, analysts and commentators are assessing both his performance in the first year of his presidency as well as the outlook for the remainder of his first term. Entering office as a surprise winner and a political neophyte, many people didn’t know just what to expect from Trump. Would he do what he pledged to do as a candidate, or was his campaign rhetoric just a lot of hot air to bamboozle enough people into voting for him? read on...

Wednesday September 28, 2016

I am here today to talk about one of the most important, but also most overlooked, issues of our day: the relationship between central banking and total war. When you focus on central banking and the problems that result from it, it’s very easy to see how central banks enable larger, more centralized, and more pervasive governments. But it isn’t always easy for those who oppose war to see how central banks enable war. So I’ll go ahead and give you kind of the 10,000 foot view of the symbiotic relationship between central banking and war.

One of the primary activities that states engage in is fighting wars. But wars cost money. Armies march on their stomachs, and someone has to buy the necessary food and transport it. Weapons and armament cost money too, all of which has to be paid for. So where have kings and governments historically gotten that money from, particularly when their own treasuries ran out? As Willie Sutton could have told them – banks.read on...

Friday February 26, 2016

The Russian government is readying a new issuance of foreign bonds and has invited non-Russian banks to participate in the bond auction. US banks would like to participate in the auction but have been warned by the State Department that this would violate the spirit, if not the letter, of US sanctions against Russia. Even though it wouldn’t be illegal for the banks to bid in the auction, the State Department is warning of “reputational risk” to those banks that do decide to participate. There must be stronger language that the State Department is using privately, in which they’re undoubtedly trying to make the banks an offer they can’t refuse.

This incident is one more example that demonstrates the contempt with which the US government holds private companies. Private companies are literally being conscripted to serve the state. Last week we found out about the FBI trying to force Apple to hack into phones it produces in order to allow the FBI access whenever it wants. Now we have the State Department trying to bully American banks into not doing business in Russia. In fact, the very concept of sanctions relies on private companies acting as arms of the state. No company would willingly turn down lucrative business opportunities in Russia. It is only through government threats that companies cooperate with sanctions. There is a name for an economic system in which ownership is nominally private but ultimate control is exercised by the government: fascism.read on...

Sunday February 14, 2016

We live in a world in which more and more things happen electronically. It is now possible to buy all your clothes online, all your books, all your food, and have them all delivered to you. Online communication allows us to communicate with almost anyone on the planet, anywhere, at any time. Someone who had fallen asleep 30 years ago would be amazed at how different things are. That extends to the realm of payments as well. Millions of people now access their bank accounts online, transferring money between accounts and paying off credit cards. Payment services such as PayPal are used by more and more merchants. Cash is being displaced by credit and debit cards, which are themselves beginning to be displaced by new digital currencies and payment systems such as Bitcoin, Samsung Pay, and Apple Pay. A world in which everything is transacted digitally may not be far off. But will this digital revolution enable a dream world for consumers or a never-ending nightmare?

Digital currencies, electronic payments, and online financial services are turning the monetary, financial, and banking systems on their heads. But despite all the advances brought about by the digital revolution, there are still quite a few drawbacks. The most obvious is that it is reliant on electricity. One major hurricane knocking out power, a mid-summer brownout, or a hacker attack on the power grid could bring commerce to a halt. With cash, transactions are still possible. With digital payments, civilization comes to an end until power is restored. Unless you have food stored or goods with which to barter, you’re out of luck. Just imagine a city like New York with no power and no way to buy or sell anything. It won’t be pretty. But those instances will hopefully be few and far between. There are other, more important problems with digital currencies and payments.read on...

Wednesday January 27, 2016

The insidious nature of the war on cash derives not just from the hurdles governments place in the way of those who use cash, but also from the from the aura of suspicion that has begun to pervade private cash transactions. In a normal market economy, businesses would welcome taking cash. After all, what business would willingly turn down customers? But in the war on cash that has developed in the 30 years since money laundering was declared a federal crime, businesses have had to walk a fine line between serving customers and serving the government. And since only one of those two parties has the power to shut down a business and throw business owners and employees into prison, guess whose wishes the business owner is going to follow more often?

The assumption on the part of government today is that possession of large amounts of cash is indicative of involvement in illegal activity. If you’re travelling with thousands of dollars in cash and get pulled over by the police, don’t be surprised when your money gets seized as “suspicious.” And if you want your money back, prepare to get into a long, drawn-out court case requiring you to prove that you came by that money legitimately, just because the courts have decided that carrying or using large amounts of cash is reasonable suspicion that you are engaging in illegal activity. Because of that risk of confiscation, businesses want to have less and less to do with cash, as even their legitimately-earned cash is subject to seizure by the government.read on...

Friday July 17, 2015

It’s July 17th, which means that Ron Paul’s new book “Swords Into Plowshares” is finally available. And what a book it is. Only the hardest of hearts and most closed of minds could read Dr. Paul’s new book and fail to be convinced of the futility of war. But what interests us the most is Dr. Paul’s discussion of the connection between central banking and war. Almost since the first banks were developed, bankers have funded government wars in exchange for receiving privileges from government. The relationship continues today, but very few politicians ever touch on it. So what does Dr. Paul have to say about central banking and warmaking?

Dr. Paul’s book starts off with personal reminiscences of life during times of war. It includes his personal experiences during World War II, his awareness of the possibility of being drafted to fight in Korea, and his eventual drafting into the Air Force during the Vietnam War. Included among his personal recollections are his comments on rationing during World War II. As a child, that was just the system that was in place, but his future understanding of Austrian economics allowed him to look back on that period of time and realize how detrimental to an economy war could be. In particular, it allowed Dr. Paul to continuously fight against those economists who repeat the lie that government spending in World War II pulled the United States out of the Great Depression. Au contraire – the government war effort did nothing for the common man, as the rationing system merely extended the misery of the Depression.

Of real interest too is Dr. Paul’s discussion of how his views developed over time. While his personal experiences always led him to be uncomfortable with the idea of war, his nascent antiwar impulses took a long time to manifest themselves fully.read on...

Saturday February 7, 2015

Greece and the European Central Bank are currently at loggerheads. The new Greek government wants to lighten its debt burden but the ECB won’t give the Greeks everything they want. Only two weeks into Syriza’s governance of Greece, the ECB has decided to play hardball, deciding that Greek government debt may no longer be used as collateral for monetary policy operations. While the ECB thought it was playing a strong hand with that move, it may end up coming back to haunt them.

That one move reduces the market demand for Greek debt. Yields will begin to rise, and the spread between Greek debt and other Eurozone countries’ securities will increase. Remember the great benefit of the euro to the peripheral European countries: all sovereign debt was treated equally by markets because it was assumed that the ECB would ensure that creditors would not suffer losses in the event that there were any difficulties with a Eurozone country servicing its debt. That enabled Italy, Spain, and Greece, among others, to borrow money at rates close to what Germany could, rates far lower than the peripheral countries had historically been able to reach.

Naturally they took advantage of that, overspent, and found themselves in difficulty. But the ECB’s bailout of Greece assuaged investors’ fears, and the spreads between peripheral debt and core Eurozone debt began to narrow again. With this latest move by the ECB, the risk is that the spread will widen with respect to Greek debt. If Greece no longer has the advantage of being able to borrow at low rates, then what good is the euro to them? Why not go back to the drachma? At least then they are in control of their own monetary policy.read on...